On Media

Niall Ferguson's ridiculous defense

Niall Ferguson, author of this week's Newsweek cover story calling for Obama's ousting, has returned fire on Paul Krugman -- albeit in a ridiculous, misleading, ethically questionable way that completely misses the mark.

In the Newsweek article, Ferguson wrote:

The president pledged that health-care reform would not add a cent to the deficit. But the CBO and the Joint Committee on Taxation now estimate that the insurance-coverage provisions of the ACA will have a net cost of close to $1.2 trillion over the 2012–22 period.

On Sunday night, Krugman charged that Ferguson's claim was misleading because the CBO report does not say that ACA will add to the defecit. "[Ferguson] is deliberately misleading readers, conveying the impression that the CBO had actually rejected Obama’s claim that health reform is deficit-neutral, when in fact the opposite is true," he wrote. Krugman also called on Newsweek to issue a correction.

But in his defense today, Ferguson argues that he was right because he was only referring to the insurance side of the ACA. But such a claim completely up-ends his argument that Obama did not hold up his end of the bargain. You cannot factor in the insurance costs while ignoring revenue anymore than you can argue that you lost money on a beer-run because you didn't include the fact that people paid you back. (Huge hat-tip to Business Insider's Joe Weisenthal, who lays this out in much clearer terms.)

So, in order to get himself out of that predicament, Ferguson decides to edit the CBO report to satisfy his own conclusions:

If you are wondering how on earth the CBO was able to conclude that the net effect of the ACA as a whole was to reduce the projected 10-year deficit, the answer has to do with a rather heroic assumption about the way the ACA may reduce the cost of Medicare. Here’s the CBO again:

“CBO’s cost estimate for the legislation noted that it will put into effect a number of policies that might be difficult to sustain over a long period of time. The combination of those policies, prior law regarding payment rates for physicians’ services in Medicare, and other information has led CBO to project that the growth rate of Medicare spending (per beneficiary, adjusted for overall inflation) will drop from about 4 percent per year, which it has averaged for the past two decades, to about 2 percent per year on average for the next two decades. It is unclear whether such a reduction can be achieved ...”

Indeed, it is, which is why I wrote what I wrote.

But Ferguson cut the CBO excerpt off mid-sentence and changed the meaning entirely. Here is how that last sentence in the excerpt actually reads:

It is unclear whether such a reduction can be achieved through greater efficiencies in the delivery of healthcare or will instead reduce access to care or the quality of care (relative to the situation under prior law.)

So contrary to what Ferguson leads readers to believe, the CBO report does not state that the reduction is "unclear." What is "unclear" is whether the reduction will come through greater efficiencies in healthcare delivery or reduced access to care.

So, one more time: The Oxford-trained, Harvard-employed, Newsweek contibutor Niall Ferguson just edited the CBO report to change its meaning.